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2011-AHP Habitat Disbursement Manual

VIEWS: 3 PAGES: 28

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     AHP
   HABITAT
DISBURSEMENT
   MANUAL
Effective February 1, 2011
                                                                                                                                     Page 2



                                            TABLE OF CONTENTS

SUMMARY .................................................................................................................................... 3
DISBURSEMENT AVAILABILITY ............................................................................................ 3
DISBURSEMENT PROCESSING ................................................................................................ 3
DISBURSEMENT CRITERIA ...................................................................................................... 4
HOUSEHOLD ELIGIBILITY GUIDELINES ............................................................................... 4
  Calculation of Income ................................................................................................................. 4
  Verification Requirements .......................................................................................................... 5
  HUD Handbook Website ............................................................................................................ 5
DISBURSEMENT FEASIBILITY ................................................................................................. 5
  Reasonableness of Project Development Costs .......................................................................... 6
  Feasibility Guidelines ................................................................................................................. 6
  Affordability Analysis ................................................................................................................ 6
DISBURSEMENT TIMELINE AND SUBSIDY ADJUSTMENTS ............................................. 7
  Timeline for Disbursement of Funds .......................................................................................... 7
  Transfer of Funds ........................................................................................................................ 7
  Subsidy Adjustments .................................................................................................................. 7
DOCUMENTS AND FORMS ....................................................................................................... 9
  AHP Habitat Disbursement Request Instructions ....................................................................... 9
  Required Documentation Descriptions ..................................................................................... 10
  Owner-occupied Retention Language....................................................................................... 22
  AHP Habitat Disbursement Request – pdf version.................................................................. 23
FREQUENTLY ASKED QUESTIONS AND COMMON MISTAKES ..................................... 25
  Frequently Asked Questions ..................................................................................................... 25
  Common Mistakes .................................................................................................................... 27
STAFF LISTING .......................................................................................................................... 28
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SUMMARY
This AHP Habitat Disbursement Manual has been designed as a reference guide for Sponsors
and Members (banks) that have been awarded Affordable Housing Program (AHP) funds by the
FHLBank of Cincinnati for Habitat or Habitat-like projects. Instructions for accessing funds,
checklists, feasibility guidelines, and retention language are included in this manual.
Please review the manual prior to submitting a request for funding. One AHP Habitat
Disbursement Request must be completed by both the Sponsor and the Member for each request.
Use the Disbursement Request form and this manual to identify acceptable documentation for
draws on homeownership projects.
You must complete the proper forms and submit the necessary documentation so that the request
may be processed as expeditiously as possible. Please allow at least 30 days for processing a
disbursement request.
For questions regarding funding, please contact the Housing Program Manager/Disbursements.



DISBURSEMENT AVAILABILITY
Disbursements will be processed by the FHLBank in accordance with the FHLBank’s procedures
and guidelines for funding of subsidies and all applicable monitoring policies, which are
published on the FHLBank’s website, www.fhlbcin.com.

Restricted Access to AHP Subsidy
The FHLBank reserves the right to deny or delay subsidy disbursement to a Member or Sponsor if:
   1. Either the Member or the Sponsor has failed to respond to a prior FHLBank request for
      information regarding this or other AHP projects, or
   2. If the Member or Sponsor has been asked by the FHLBank to cure a noncompliant situation
      and resolution is pending, or
   3. The Sponsor currently has other older, open, and incomplete AHP projects that must be
      closed or making adequate progress towards completion.



DISBURSEMENT PROCESSING
In processing disbursement requests, the FHLBank reviews the information submitted with the
disbursement request and other pertinent project information obtained from the Member and
Sponsor during the review process. The FHLBank verifies that the project continues to qualify
for the awarded subsidy based on the applicable threshold requirements and scoring criteria and
that the Member and Sponsor have complied with the obligations committed in the approved
application. The FHLBank re-evaluates the financial and operational feasibility of the project
and verifies the project’s continued need for subsidy. Members and Sponsors requesting AHP
funds from the FHLBank must have documents in place in a form satisfactory to the FHLBank to
meet the requirements of the AHP Regulation and may be required, upon the FHLBank’s
request, to provide copies of such documents to the FHLBank prior to the FHLBank’s
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disbursement of funds. Below is a detailed list of documents required for disbursement
processing. The FHLBank reserves the right to request further documentation as necessary.
All AHP funds are subject to the FHLBank’s funding requirements. Receipt of a disbursement
does not guarantee compliance with the AHP guidelines. The FHLBank reserves the right to
reduce or recapture funds at any time, should the project be found out of compliance or no longer
demonstrate the need for subsidy.



DISBURSEMENT CRITERIA
All disbursements will require certain documentation necessary for the FHLBank to process the
request. Habitat projects must submit one disbursement request per household upon sale of the
home, as evidenced by the executed Note and Mortgage (Deed of Trust). The documents
required will be described in detail towards the end of this manual. The FHLBank should
receive the disbursement request package within 60 days of the closing of each unit in the
project.

A preliminary review can be completed by the FHLBank before the homebuyer closes on the
property to determine income targeting, special needs or elderly status, homeless status, or first-
time homebuyer status for a specific homebuyer. Reviews can take up to 30 days. In order to
complete the review, the FHLBank must receive the following in a form that meets the standards
set forth in this manual:

           Fax coversheet or email indicating the project number, homebuyer name, and
            property address (or at least county if not the full address)
           Signed and dated initial application/intake form
           Documentation of household size if not indicated on the application
           Third-party income documentation of all income sources for the initial intake
            application year for all household members age 18 or older
           Verification of homeless, special needs, elderly, or first-time homebuyer status, if
            applicable

After closing of the property, the Sponsor must submit the remaining documents listed on the
AHP Habitat Disbursement Request in order to receive funds.


HOUSEHOLD ELIGIBILITY GUIDELINES
Verification of the household’s eligibility is required for a disbursement. Household size,
income, and status (special needs, elderly, homeless, etc.) must be verified and documented for
all prospective AHP fund recipients.

Calculation of Income
The FHLBank requires that all households meet the income targeting requirements outlined in
their project’s application or approved project modification. The FHLBank adheres to the
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income calculation guidelines found in Section 5.5 of the HUD Handbook 4350.3. The income,
along with income from assets, of all household members age 18 or older must be verified along
with any disability benefits or child support payments received for a child for the calendar year
in which the initial application or intake form was completed. Please refer to Chapter 5 of the
HUD Handbook 4350.3 for a complete list of income inclusions and exclusions and for more
information on calculating income derived from assets. The annual income is calculated for the
initial intake application year from January to December. The annual income percentage is
based on the MTSP (for initial intake applications dated in 2009 or later) or HUD (for
applications dated in 2008 or earlier) limits for the year of the initial intake application for the
number of persons residing in the household in the county and state where their property will be
located.
MTSP limits can be found at: http://www.huduser.org/portal/datasets/mtsp.html.
HUD limits can be found at: http://www.huduser.org/portal/datasets/il.html. Very low income is
the 50% income limit.
Similar information is also available on the FHLBank’s website at www.fhlbcin.com under
Resources/Webinars by clicking the link to the “Determining Income” webinar. This webinar is
geared toward our Welcome Home Program, but the calculation of the household income is the
same for both programs.

Verification Requirements
The FHLBank prefers that all verifications come from third-party sources such as pay stubs,
verifications of employment, W-2s, or signed tax returns. However, second-party verification
may be acceptable if third-party verification cannot be reasonably obtained. Please refer to
Chapter 5 of the HUD Handbook 4350.3 for acceptable forms of verification. The date of the
income documentation must match the year of the initial intake application except for child
support documents such as the divorce decree or child support court order.

HUD Handbook Website
http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4350.3/43503c5HSGH.pdf



DISBURSEMENT FEASIBILITY

The project must meet all feasibility requirements and guidelines outlined here or provide
explanations satisfactory to the FHLBank for any values outside the guidelines. Projects that
deviate from these parameters will undergo additional review and underwriting to determine the
reason for, and the reasonableness of, any deviation. Based on this review and underwriting,
staff may work with project Sponsors or owners to make adjustments to the financial information
submitted at application or at disbursement to ensure that the information accurately reflects the
nature and financial structure of the project.
The FHLBank may also allow reasonable deviations from the guidelines, based on the nature,
location, and type of project and based on explanations provided by the Sponsor to justify such
deviations. However, the Sponsor or project owner is ultimately responsible for ensuring that
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financial information is correct and consistent and that the project’s financial structure meets the
FHLBank’s guidelines, or that any deviations are adequately explained, justified, and
documented. The FHLBank assumes no obligation to reconcile conflicting information, accept
incomplete information, or seek additional information or clarification that is not provided at
time of application or disbursement request.


Reasonableness of Project Development Costs
Project feasibility will be reviewed and assessed at time of application, at time of disbursement,
and at any project modification. The FHLBank will determine the reasonableness of proposed or
actual costs based on its experience with similar projects, similar locations, and similar
populations being served. The FHLBank’s determination will be final and any costs determined
not reasonable will be disallowed and will not be reimbursed with AHP funds.


Feasibility Guidelines
    “Total development costs” are expected to not exceed $175,000 per unit.
         a.   Analysis of project costs will consider the geographic location of the project,
              development conditions, and other non-financial household or project
              characteristics. Total development costs per unit may exceed the guideline only if
              justified by the applicant based on the special circumstances cited.
         b.   Even costs below the guideline must be determined to be reasonable. The
              guideline is not intended as a “safe harbor.” The FHLBank may review costs per
              unit, costs per square foot, individual line-item costs, or use other measures to
              determine that development costs are reasonable.
    Fees to developer, consultant, application preparer, and similar costs, such as
     construction management in projects for which the Sponsor acts as the general contractor
     (collectively considered “developer fee”) may not exceed the percentage (maximum at
     application is 15%) approved of total development costs or amount of developer fee
     approved at application.
    “Construction Hard Costs” must be at least seventy five percent (75%) of “Total
     Development Costs.”
    The AHP subsidy requested for a project may not exceed $50,000 per AHP-eligible unit.
     The AHP subsidy requested should not be higher than the subsidy approved per unit at
     application unless future units will fall below this limit.


Affordability Analysis
    Using the area median income (adjusted for the number of persons residing in the
     household per the intake application) for the intake year in the county where the property
     is located and the monthly mortgage amount plus monthly insurance, taxes, and estimated
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       utilities, we calculate the affordability range of the potential partner family based on the
       housing expenses.
    The housing expenses should be between 20 percent and 30 percent of the partner
     family’s gross annual income as determine for the intake application year.
    If the annual income is not between these values, the FHLBank will only disburse a
     maximum of $7,500 per unit if sweat equity has been completed or a maximum of $5,000
     without sweat equity.
    If the homebuyer receives Section 8 to Homeownership Assistance or other comparable
     income (documentation must be submitted), then the home is deemed affordable to the
     homebuyer, and this calculation is not performed.




DISBURSEMENT TIMELINE AND SUBSIDY ADJUSTMENTS

Timeline for Disbursement of Funds
Once the Disbursement Request with all supporting documentation is received, the FHLBank
will begin analyzing the information and will contact the Sponsor and the Member via fax or
email should additional information or clarification be required. All disbursements will be
processed in the order in which they are received.
Please allow at least 30 days for the processing of all disbursement requests. However, should
the FHLBank receive incomplete or incorrect documentation, delays in the disbursement process
could occur. Upon a complete review, additional information is requested and the requested
information should be received by the FHLBank within 30 days. For a timely receipt of funds,
refer to the Frequently Asked Questions and Common Mistakes sections of this manual for tips
on how to avoid unnecessary delays.



Transfer of Funds
Once your request has been approved, the Member and Sponsor will receive a Confirmation of
AHP Funds Disbursement via fax or email indicating the amount disbursed for the homebuyer.
Within one business day, the FHLBank will electronically deposit the approved funds into the
Member’s Demand Deposit Account with the FHLBank. If the Member does not receive the
funds within this timeframe, please contact the Housing Program Manager/Disbursements for
assistance.



Subsidy Adjustments
The FHLBank reserves the right to make reasonable adjustments to all Disbursement Requests at
the FHLBank’s discretion, in accordance with the FHLBank’s procedures and guidelines for
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funding of subsidies and all applicable monitoring procedures. The majority of subsidy
adjustments occur if the project’s funding sources have changed and there is no longer a need for
subsidy, if the project no longer meets the applicable scoring criteria as outlined in the AHP
Agreement, if the household does not meet the income-eligibility criteria or feasibility
guidelines, if AHP monies are being used for ineligible expenses, or if the costs presented are not
reasonable. If you have questions regarding an adjustment made to your Disbursement Request
or the total amount of your AHP award, please contact the Housing Program Manager/
Disbursements for more information.
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DOCUMENTS AND FORMS
AHP Habitat Disbursement Request Instructions
Collaboration between the project Member and Sponsor is necessary to complete the request
form and provide the required documentation. Please follow the steps below to request funds. If
you need additional assistance, contact the Housing Program Manager/Disbursements.

Step 1: Complete the AHP Habitat Disbursement Request

      All sections on the AHP Habitat Disbursement Request must be completed. Attach
       additional sheets if necessary to provide any explanations. An incomplete request form or
       missing documentation may delay the funding process.
      If there is no change or the question is not applicable, please check the “N/A” box.

Step 2: Provide Required Documents

For all funding disbursements:
      The Affordable Housing Program Agreement and Contingency Letter must be signed by
       the project Member and Sponsor and returned to the FHLBank with original signatures.
      Additional documents are necessary. Please see the AHP Habitat Disbursement Request
       checklist for required documentation and this manual for required formatting. Incomplete
       or missing documentation may delay the funding process.

Step 3: Obtain Required Signatures

      The AHP Habitat Disbursement Request must have signatures from both the project
       Member and Sponsor contacts.

Step 4: Submit the AHP Habitat Disbursement Request with all required supporting
documentation
      By Email: AHPDisbursement@fhlbcin.com
          o Subject line must indicate: [Project number] [Homebuyer’s name] Disbursement or
             Preliminary Review
      By Mail:
           Housing and Community Investment
           Federal Home Loan Bank of Cincinnati
           221 E. 4th Street
           Cincinnati, OH 45202
      By Fax: 513-852-7647
                                                                                            Page 10



Required Documentation Descriptions

                    REQUIRED DOCUMENTATION DESCRIPTIONS

     AHP Habitat               Must be executed by the Sponsor and Member contacts and all
     Disbursement              sections of the request must be completed. Check the boxes for
     Request                   “Already on file,” “Enclosed,” or “N/A.”

1a   Direct Subsidy            Must be executed by two signers from the Member bank
     Agreement                 authorized to draw funds from the FHLBank. Original signatures
                               are required. This document was mailed to the Member contact
                               when the project was approved. This is only required one time.

1b   Affordable Housing        Must be executed by the Member and Sponsor contacts. This
     Program Agreement         document was mailed to the Sponsor and Member contacts when
                               the project was approved. Original signatures are required. This
                               is only required one time.

1c   Contingency Letter        Must be executed by the Member and Sponsor contacts. This
                               document was mailed to the Sponsor and Member contacts when
                               the project was approved. Original signatures are required. This is
                               only required one time.
     Executed and dated
2a                             Must be the initial intake application/form for the homebuyer(s)
     initial loan              and must be signed and dated by the homebuyer(s).
     application or intake
     form
2b   Documentation of          If it cannot be determined from the application/intake form, the
     household size, if not    Sponsor must submit a current, executed letter indicating the
     stated in the             persons who were intending to reside in the household at the time
     application               of initial application, their age(s), and details as to why this has
                               changed if it differs from the initial application/intake form.

2c   Third-party               All income documentation must be from the year in which the
     verification, from the    initial application/intake form was taken from January to
     year the application is   December. If the application was taken mid-year, the income will
     dated, for all income     be annualized. Additional income documentation instructions can
     sources for all           be found in the HUD Handbook at
     household members         http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4350.3/
     18 years old or older     43503c5HSGH.pdf
                                   Employment: two consecutive pay stubs containing year-
                                    to-date information, verification of employment form, W-
                                    2, or a signed tax return. The FHLBank’s calculation
                                    includes overtime, commission, etc.
                                   Social Security or disability: 1099-SSA, benefit statement,
                                                                                       Page 11


                                 payment history, print-out from the SSA, etc.
                              Child Support: notarized statement from the payer to the
                               payee, child support court order or divorce decree from any
                               year, or payment history report from a child support
                               enforcement agency.
                              Self-employment: 2 most recent signed tax returns with all
                               schedules. The FHLBank will use the FNMA Form 1084
                               Cash Flow Analysis to determine the income for the
                               current year by averaging the two most recent years’
                               income. You can obtain the form at
                               https://www.efanniemae.com/sf/formsdocs/forms/1084.jsp
                              Pension: most recent monthly pension account statement or
                               two months’ most recent bank statements if funds are
                               directly deposited.
                              Unemployment compensation: verification form completed
                               by source, benefit notification letter signed by authorizing
                               agency.
                              Zero Income: partner family/occupant self-certifies to zero
                               income (Certification of Zero Income is available on our
                               website at www.fhlbcin.com under the Welcome Home
                               documents).
                              Section 8 to Homeownership Assistance or other
                               comparable income is not included in the calculation of
                               income for the household but is needed to verify
                               affordability.

3a   Homebuyer attended   “Homeownership counseling” means a program provided by, or
     mandatory            based on one provided by, an organization recognized as
     homeownership        experienced in homeownership counseling. The counseling
     counseling           program must cover, at minimum, mortgage financing, credit-
                          worthiness, household budgeting, and home maintenance.
                          Must be documented with one of the following:
                              Current, executed letter from the Sponsor indicating that
                               the homebuyer(s) participated in the counseling
                              Homebuyer counseling course completion certification
                          If the documentation goes into specifics of each of the classes, the
                          FHLBank will require evidence that the classes include home
                          maintenance, credit-worthiness, household budgeting, and
                          mortgage financing.
                          The Bank encourages the counseling to include information on
                          predatory lending.
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3b   First-time homebuyer   “First-time homebuyer” means an individual or family who has
                                 not owned a home during the three-year period prior to the
                                 purchase of a home, except that:
                             1) Any individual who is a displaced homemaker may not be
                              excluded from consideration as a first-time homebuyer on the
                              basis that the individual, while a homemaker, owned a home
                              with his or her spouse or resided in a home owned by the
                              spouse; or
                             2) Any individual who is a single parent may not be excluded
                              from consideration as a first-time homebuyer on the basis that
                              the individual, while married, owned a home with his or her
                              spouse or resided in a home owned by the spouse; or
                             3) Any individual or family may not be excluded from
                              consideration as a first-time homebuyer on the basis that the
                              individual or family owns a home that:
                                a) Is not intended as a dwelling;
                                b) Was lost through natural disaster; or
                                c) Is manufactured housing which was not originally
                                 assembled to meet nationally recognized standards; or is not
                                 permanently affixed to a foundation that meets nationally
                                 recognized building code standards.
                            Must be documented with one of the following:
                                Current, executed letter from the Sponsor indicating that
                                 the homebuyer(s) is (are) first-time homebuyer(s).
                                Indication in the application that the family has rented for
                                 the previous 3+ years.
                                For Round 200802 only, first-time homebuyers can be any
                                 households who have lost their home due to foreclosure;
                                 documentation will be required from the lender.

3c   Homeless household     Must be documented with one of the following, and the intake
     meeting FHLBank’s      application received must support the certification of homeless
     definition             status:
                                “Overcrowded housing” may be documented with a dated
                                 and executed certification from the Sponsor regarding
                                 living conditions at time of application. “Overcrowded
                                 housing” means a housing unit occupied by more than one
                                 household or any housing unit with an average of more
                                 than two persons per sleeping area (including a living
                                 room as a sleeping area). For example, seven people
                                 residing in a two-bedroom apartment qualifies as
                                                                                     Page 13


                                overcrowded housing; or
                             Copy of notice of condemnation or eviction notice; or
                             Independent inspection of the property where the
                              homebuyer was residing at time of application indicating
                              that the property is uninhabitable and that repair/rehab is
                              not economically feasible in the year if the intake
                              application; or
                             Executed and dated narrative from the Sponsor regarding
                              the homebuyer’s lack of a fixed, regular, and adequate
                              nighttime residence; or
                             Notice from a supervised publicly or privately operated
                              shelter; or
                             Notice from an institution that provides a temporary
                              residence for individuals intended to be institutionalized;
                              or
                             Evidence that the homebuyer’s primary nighttime
                              residence is a “mobile home” that was constructed before
                              1976 and does not meet the National Manufactured
                              Housing Construction Safety Standards. This can be an
                              appraisal indicating the year constructed or other
                              comparable documentation deemed acceptable by the
                              FHLBank; or
                             For Round 200802 only, homeless can be any household
                              who has lost their home due to foreclosure; documentation
                              will be required from the lender for the foreclosure notice.
3d   Special needs or    “Elderly” means any person aged 55 or older. This is verified
     elderly household   with the birth date or age on the intake application.
     meeting FHLBank’s   “Special needs” means any person or household meeting one of
     definition          the following additional definitions, and acceptable verification
                         can be one of the options below (Do NOT submit medical
                         records):
                         1. Physically disabled means any person with a physical
                             impairment which results in substantial functional limitations
                             documented by one of the following two options:
                             Option A. Must receive the SSI or SSD disability statement
                             or similar statement from a federal or state government from
                             the intake application year.
                             Option B. Signed and dated letter from licensed physician
                             who attests that the person is deemed physically disabled and
                             that by reason of this impairment is unable to perform life
                             roles in at least one of the major domains of living, working,
                                                              Page 14


    learning or socializing.
2. Mentally disabled means any person who is diagnosed with a
    psychiatric disorder as documented by one of the following
    two options:
    Option A. Must receive the SSI or SSD disability statement
    or similar statement from a federal or state government
    agency from the intake application year.
    Option B. Signed and dated letter from licensed psychiatrist,
    psychologist, or clinical social worker who attests that the
    person is deemed to have a comparable long-term mentally
    disabling condition and that by reason of this impairment that
    the person is unable to perform life roles in at least one of the
    major domains of living, working, learning or socializing.
3. Developmentally disabled means any person having a severe
chronic developmental disability who has been diagnosed with
mental retardation as documented by one of the following two
options:
       Option A. Must receive the SSI or SSD disability
       statement or similar statement from a federal or state
       government agency from the intake application year.
       Option B. Signed and dated letter from licensed physician
       who attests that the person is deemed developmentally
       disabled and that by reason of this impairment is unable to
       perform life roles in at least one of the major domains of
       living, working, learning or socializing.
4. Co-occurring disabled means any person diagnosed as having
both a psychiatric disorder as well as a substance
abuse/dependence (co-occurring) as documented by one of the
following two options:
       Option A. Must receive the SSI or SSD disability
       statement or similar statement from a federal or state
       government agency from the intake application year.
       Option B. Signed and dated letter from a licensed
       psychiatrist, psychologist or clinical social worker
       attesting that by reason of their co-occurring condition
       they are unable to perform life roles in at least one of the
       major domains of living, working, learning or socializing.
5. Chemically dependent means any person with a history of
substance abuse/dependency who is receiving treatment for the
abuse/dependency as documented by one of the following options:
       Option A. Signed and dated letter from the entity
       providing the recognized therapeutic program indicating
                                                                                            Page 15


                                     that the household member is in the program.
                                     Option B. Signed and dated letter from a licensed
                                     physician, psychiatrist, psychologist, or clinical social
                                     worker indicating that the person in the household is
                                     receiving treatment for the chemical abuse/dependency.
                              6. Persons with AIDS means any person with a medical diagnosis
                              of Auto Immune Deficiency syndrome or medical diagnosis as
                              HIV positive and who is receiving medical care for the condition
                              as documented by one of the following two options:
                                       Option A. Must receive the SSI or SSD disability
                                       statement or similar statement from a federal or state
                                       government agency from the intake application year.
                                       Option B. Must receive the medical diagnosis and
                                       indicate who is receiving medical care for the condition
                                       diagnosed.
                              7. The FHLBank will also consider other limiting factors and
                              conditions in defining “special needs” to ensure that no person or
                              household will be unnecessarily or inadvertently excluded under
                              the definition above. Acceptable documentation must be
                              submitted.
     Property vacant due
3e                            Must be documented with one of the following:
     to foreclosure, deed
     in lieu, or short sale       Foreclosure sale document
     at purchase                  Evidence that the borrower conveyed property back to
                                   lender
                                  Letter from the lender
                                  Some other comparable document.
                              AND evidence that the property was vacant at the time it was
                              acquired by the Sponsor through one of the following:
                                   Photos dated within one year of the acquisition
                                   Appraisal dated within one year of the acquisition
                                   Other FHLBank approved documentation

                              Units qualifying for these points must have been acquired by the
                              AHP Sponsor (or household AHP recipient) directly from
                              the foreclosure or sheriff’s sale, auction, or lender involved in the
                              foreclosure. Properties that use the county or city as the
                              intermediary between the lender and the Sponsor also qualify
                              under this scoring criterion. Units that passed through
                              the ownership of other entities except for the city or county
                              subsequent to the foreclosure process but prior to acquisition by
                                                                                         Page 16


                             the AHP Sponsor (or the household AHP recipient) DO NOT
                             qualify for points under the AHP program.

                             Projects were approved with at least 20% and up to greater than
                             50% of the units meeting this criterion at application.
     Property being
3f                           Must be documented with one of the following to evidence that
     rehabbed was vacant     the property was vacant at the time it was acquired by the
     due to foreclosure or   Sponsor:
     other at purchase
                                  Photos dated within one year of the acquisition
                                  Appraisal dated within one year of the acquisition
                                  Other FHLBank approved documentation
                             Projects were approved with at least 20% of the units meeting this
                             criterion.
     Homeowners
4a                           “Homeownership Club or Homeowners Association” means an
     Association with        association of homeowners, created to allow regular discussions of
     policies and            homeownership issues and neighborhood and community issues.
     procedures              The association must be comprised of at least four homeowners,
                             should have regular meetings, and some policies and procedures
                             governing its business, but it does not have to be formally
                             chartered or incorporated.
                             Must provide a current, executed letter from the Sponsor
                             indicating that the homeowners association has been formed along
                             with documentation reflecting some policies and procedures
                             governing its business. This is only required once.
     Empowerment
4b                           Must be a current, executed letter from the Sponsor indicating that
     activities, such as     the services approved in the application are available to the
     budgeting/credit        homebuyers. This is only required once.
     counseling,
     transportation, case
     management, etc.
     8 hours of
4c                           Must be documented with one of the following:
     landscaping detailing
     the activities              Current, executed letter from a community organization
     performed                    indicating that the 8 hours of landscaping labor have been
                                  provided and what activities were completed.
                                 Email that contains the contact name and information, and
                                  the organization’s name that indicates that the 8 hours of
                                  landscaping labor that have been provided and what
                                  activities were completed.
                             This is only required once.
                             For 2007 projects, this commitment must be from the Member
                                                                                           Page 17


                               bank.
     40 hours of
4d                             Must be documented with one of the following:
     construction labor
     detailing the                 Current, executed letter from a community organization
     activities performed           indicating that the 40 hours of construction labor have been
                                    provided and what activities were completed.
                                   Email that contains the contact name and information, and
                                    the organization’s name that indicates that the 40 hours of
                                    construction labor that have been provided and what
                                    activities were completed.
                               This is only required once.
                               For 2007 projects, this commitment must be from the Member
                               bank.
     Donation of at least
4e                             Must be documented with one of the following:
     $500 in
     goods/services                Current, executed letter from an organization indicating
                                    that they have provided the service or good and that it is
                                    worth at least $500.
                                   Email that contains the contact name and information, and
                                    the organization’s name that indicates that they have
                                    provided the service or good and that it is worth at least
                                    $500
                               The donation must be for an eligible cost as indicated on the
                               development budget.
                               This is only required once.
     Fee waiver from the
4f                             Must be a current, executed letter from a government organization
     local government of       indicating that they have provided the fee waiver for the project
     at least $500             and the value of the savings to the project. This is only required
                               once.
     Completed and
5a                             Must be the completed and executed AHP Sponsor Commitment
     executed AHP              Verification Form that is located on the FHLBank website.
     Sponsor Commitment
     Verification Form (on     Submit with the last disbursement.
     website) if this is the   Check which of the approved activities have been completed and
     last disbursement for     describe, if applicable.
     the project
                               If the project was not approved with the Sponsor completing any
                               of the activities listed on the form, the form is not required.

5b   Sponsor cash              Must be shown on a homebuyer(s) Attachment D/Detailed Cost
     contribution              Breakdown under Cash Contributions/Fundraising evidencing at
     verification, if          least $250 for 2007 and earlier projects and at least $500 for 2008
                                                                                            Page 18


      applicable                and forward projects.

6     Final Attachment D        Must use the FHLBank Attachment D with the attached Detailed
      and executed              Cost Breakdown located on the FHLBank’s website at
      Detailed Cost             www.fhlbcin.com under Resources/Documents and Forms.
      Breakdown available       The Attachment D and Detailed Cost Breakdown submitted with
      at www.fhlbcin.com.       the Disbursement Request must reflect the final costs and sources
      (Must use the             for the homebuyer. Follow the directions on the Instructions tab
      FHLBank’s forms.)         of this file to complete the form. If changes need to be made to
      The Developer’s Fee       the documents after submission to the FHLBank but before
      must be less than or      disbursement of AHP monies, the FHLBank will only allow and
      equal to the              accept changes to the Developer’s fee, Cash Contributions/
      Developer’s Fee
                                Fundraising, Closing Date, Mortgage Amount, and Mortgage
      amount OR                 Term. Any other changes will be evaluated by management on a
      percentage approved
                                case-by-case basis and additional documentation will be required.
      per unit in the AHP
      application. For          The FHLBank will no longer accept QuickBooks or other forms of
      rehab-only, submit all    documentation for the Detailed Cost Breakdown.
      of the invoices/          For rehab-only projects, must submit:
      receipts.
                                    All invoices or receipts for all rehab expenses and a
                                     breakdown that relates to the total expenses for that unit if
                                     not broken out on the Detailed Cost Breakdown.
                                     Undocumented costs will not be allowed.
                                If the repayable mortgage amount is greater than the total costs
                                listed on Attachment D, submit:
                                    Appraisal for the property that is dated within one year of
                                     purchase by the homeowner to evidence that the appraised
                                     value is higher than the mortgage value.
                                Developer’s fee:
                                    The Developer’s fee may not exceed the percentage
                                     approved of total development costs or amount of
                                     developer fee per unit approved at application; otherwise,
                                     the grant will be reduced by the difference.
                                    Regardless of the dollar amount, the developer’s Fee
                                     cannot exceed 15% of the total development costs.
                                    Developer’s Fee equals the sum of the developer fee,
                                     developer overhead, consultant fee, and construction
                                     management fee if the Sponsor is the general contractor.
      Verification of land
7ab                             Must be documented with one of the following to verify the price
      cost paid by Habitat
c                               of the land paid by or donated to the Sponsor:
      Verification that price       HUD-1 Settlement Statement executed by both buyer and
      paid by Habitat is at
                                                                                             Page 19


     least 50% below-                seller or settlement agent
     market                       Warranty deed evidencing the amount
     Verification that land       Purchase contract
     was donated to               Letter from the grantor
     Habitat
                              Attachment D and Detailed Cost Breakdown must show:
                                  The amount paid for the land as the Land Paid Cost.
                                  The market value of the donated land as the Donated Land
                                   Value.

7d   Appraisal or Property    Must verify the market value of the land with an appraisal or
     Value Assessment         Property Value Assessment (PVA) from the county recorder’s
     dated within one year    office (some have websites) dated within one year of the
     of the acquisition       acquisition date.
     date by Habitat to       Related-party transactions require an appraisal.
     document the market
     value                    “Related party” means any party related by family, business, or
                              personal interest to a Sponsor, Member, or other party directly
                              involved in an AHP project. Developer, tax credit syndicator,
                              consultant, property manager, service provider, and contractor are
                              all considered parties directly involved in an AHP project.
                              Related parties would include any persons related by family,
                              business, or personal interest to any member of the Sponsor’s
                              board of directors or staff, the Member’s board of directors or
                              staff, or the board of directors or staff of any other party directly
                              involved in an AHP project.
                              If the price paid for the land is greater than the market value, the
                              grant amount will be reduced by the difference unless:
                                  The project was reduced for this reason at the time of
                                   approval, or
                                  Submit a current, executed letter from a funding source
                                   shown on the final development budget for the homebuyer
                                   indicating their funds are paying for the land cost that
                                   exceeds the market value. Acceptable sources to cover this
                                   can be the Sponsor mortgage, Sponsor fundraising, or other
                                   grants. The Attachment D and Detailed Cost Breakdown
                                   must support the amount indicated in the letter.

8    Executed Notes and       Must provide an executed Note and Mortgage (Deed of Trust) for
     Mortgages (Deeds of      all loans to the homeowner, even if forgivable. This is required
     Trust) for all loans,    for all loans from any party.
     even if forgivable       The principle loan amount, term, and rate on the Note for any loan
                              repayable to Habitat must match the amounts indicated on
                                                                                            Page 20


                             Attachment D. Repayable second mortgages that are not paid to
                             Habitat should not appear in the Habitat Note/Mortgage Amount
                             on Attachment D but should show as an Other Cash Source on the
                             Detailed Cost Breakdown. Forgivable mortgages should not
                             appear on either the Attachment D or Detailed Cost Breakdown.
                             If there is no second (forgivable or not) loan, submit a letter or
                             email indicating there is no second loan.

9    Evidence of ALL         If the project was approved for SHOP, NSP, HOME funds, etc.,
     funding sources         the executed grant or funding agreements must be submitted.
     approved in the         If the project was approved for a cash contribution from the
     application and         Member, see 11d below for information on how to verify this.
     additional sources.
     Include copies of all   If the project was approved for a cash contribution from any other
     executed funding        source, a current executed letter verifying the cash contribution or
     grant agreements,       cancelled check must be submitted.
     equity letters, etc.    For other permanent loans, the executed Note and Mortgage (Deed
                             of Trust) must be submitted.
                             If the development budget indicates $10,000 and this is
                             documented with a check or a grant agreement indicating $10,000
                             is HOME monies, this is acceptable. If the development budget
                             indicates $25,000 and a check for only $10,000 was received,
                             verification of the difference must be submitted.
                             If approved sources were not used for a homebuyer, indicate this
                             in the disbursement package submitted.
                             All funding sources may be submitted at any point that the project
                             is open. However, they must be documented by the time of the
                             last disbursement.

10   Warranty deed           Must submit a deed indicating the property has been transferred to
     evidencing that the     the homeowner and that the current FHLBank retention language
     property is in the      is in the deed or referenced in the deed as an exhibit or addendum.
     name of the             If the deed states an ending date for the retention language, this
     homeowner and           date must correspond to 5 years after the closing date.
     FHLBank retention
     language is inserted    “Retention period” means: Five (5) years from closing for an
     or attached                 AHP-assisted owner-occupied unit, or in the case of
                                 rehabilitation of a unit currently occupied by the owner where
                                 there is no closing, five years from the date that such
                                 rehabilitation is complete
                             Please note that the retention language changes periodically and
                             only the most recent language will be accepted.
                             The most current retention language is attached to this document
                                                                                        Page 21


                               and can be found on our website at www.fhlbcin.com.

11a   Bridge or                Must be documented with executed copies of Note(s) and/or
      construction loan        Mortgage(s) (Deed(s) of Trust). This is only required once.
      from the Member

11b   Below-market rate on     Must be documented with one of the following:
      the construction or           Executed Note and a copy of the standard rate sheet for
      bridge loan from the           loans of this type offered by the Member and published
      Member                         for the general public
                                    Current, executed letter from the Member bank indicating
                                     the below-market interest rate for the project and how the
                                     interest rate is below-market.
11c   Reduced/waived fee       Must be documented with one of the following:
      on the construction or        Settlement Statement(s) which indicates the actual costs
      bridge loan from the           and fees charged for the loan and general lending program
      Member                         documents which indicate the normal fees and costs
                                     associated with that type of loan.
                                    Current, executed letter from the Member bank explaining
                                     the reduced costs/fee waivers for the project.
11d   Cash contribution        Must submit a copy of the cancelled check.
      from the Member          This contribution must be listed as an Other Cash Source on one
                               of the Detailed Cost Breakdowns for a homebuyer in the project.
11e   Servicing of             Must be documented with one of the following:
      homebuyers’ loans             Language in the Note indicating where the payments are
      originated by the              made.
      Sponsor at no cost
      from the Member               Current, executed certification from the Member that the
                                     loan has been/will be set up on the Member’s servicing
                                     system.
                                                                                              Page 22




Owner-occupied Retention Language


                            Owner-occupied Retention Language


The language below should be inserted into the Warranty Deed or as a Restrictive Covenant to
the Warranty Deed. If it is attached to the Warranty Deed as an addendum or attachment, the
Warranty Deed must reference the addendum or exhibit. If recorded as a Restrictive
Covenant, the document must reference the Warranty Deed.


Borrower(s), their successors, heirs and assigns for and in consideration of receiving direct
subsidy funds from the Federal Home Loan Bank of Cincinnati’s Affordable Housing Program,
must maintain ownership in this property for a period of five (5) years (Retention Period) from
the date of the recording of this deed.
i.     The Federal Home Loan Bank of Cincinnati, whose mailing address is P.O. Box 598;
       Cincinnati, OH 45201-0598, is to be given notice of any sale, refinancing, foreclosure,
       conveyance by deed in lieu of foreclosure, assignment of the first mortgage to the
       Secretary of HUD, or change in ownership of the unit occurring prior to the end of the
       Retention Period.
ii.    In the case of a sale or refinancing prior to the end of the Retention Period, an amount
       equal to a pro rata share of the AHP Subsidy that financed the purchase, construction, or
       rehabilitation of the unit, reduced for every year the seller owned the unit, shall be repaid
       to The Federal Home Loan Bank of Cincinnati from any net gain realized upon the sale
       or refinancing of the unit; unless:
       (A)    The unit was assisted with a permanent mortgage loan funded by an AHP
              advance;
       (B)    The purchaser is a very low- or low- or moderate-income household as defined in
              the applicable Federal Housing Finance Agency regulations for the AHP (in
              which case the retention period ends with the conveyance to such purchaser); or
       (C)    Following a refinancing, the unit continues to be subject to a deed restriction or
              other legally enforceable retention agreement or mechanism, incorporating the
              requirements of clauses (i), (ii), and (iii) contained herein.
iii.   The obligation to repay Subsidy to the Bank shall terminate after any foreclosure or
       conveyance by deed in lieu of foreclosure or any assignment of the first mortgage to the
       Secretary of HUD.
                                                 Page 23



AHP Habitat Disbursement Request – pdf version
Page 24
                                                                                         Page 25



FREQUENTLY ASKED QUESTIONS AND
COMMON MISTAKES
Below is a list of frequently asked questions and common mistakes that often occur when
requesting a disbursement of funds. They are being provided in an attempt to assist Members
and Sponsors in expediting the disbursement process.


Frequently Asked Questions
   Q. Why does the FHLBank require documentation before releasing funds?
   A. In order to determine that grant recipients are eligible for AHP funds and to reduce the
      potential for recapture of funds from our Members, we require documentation of pass-
      through of AHP funds, evidence of acceptable long-term retention documentation, and
      independent verification of income on each prospective AHP funds recipient.

   Q. Can a homebuyer receive cash back at closing?
   A. No. This is strictly prohibited and will result in a reduction of the grant.

   Q. Are you concerned with the date of the income documentation?
   A. Income documentation, such as pay stubs, verification of employment, Social Security
      income, or unemployment, must be dated the same year in which the homebuyer(s) initial,
      executed application is dated. Please refer to this manual and the “Determining
      Income” webinar on the website at www.fhlbcin.com under Resources/Webinars to
      determine acceptable forms of income documentation.

   Q. Should I include food stamps in calculating income?
   A. No. Food stamps are not considered income for the purposes of calculating eligibility.

   Q. How does the FHLBank calculate an applicant’s overtime?
   A. We use the applicant’s year-to-date overtime and project it over a 52-week period. If the
      applicant is not expected to work additional overtime, we will require documentation
      from the employer indicating such. We will then add the overtime earned to his/her
      regular gross income.

   Q. Does the FHLBank have a standard retention document?
   A. Yes. The retention language is a part of this manual, but you should rely on the most
      current retention language on the FHLBank’s website under Resources/Documents and
      Forms/Attachment G - Retention Agreements.
                                                                                        Page 26


Q. One of my proposed funding sources was not approved. Will my project be cancelled?
A. If other financing or additional fundraising/cash contributions can be obtained within a
   reasonable timeframe, the project will not be cancelled.

Q. If I received approval for an AHP grant, why do I need to send updated financial
   information when I request a disbursement of AHP funds?
A. The approval of AHP funds for your project is a commitment to fill the financial gap that
   you have identified. The FHLBank will analyze a project’s financial structure for
   continued need for AHP funds at several stages. These include application approval,
   disbursement of funds, project modifications, and project completion. At any of these
   stages, the AHP funds could be reduced or eliminated if the project has changed
   significantly enough. In most cases, our analysis should not be cause for undue concern,
   since the great majority of projects continue to demonstrate the need for the full amount
   of the AHP commitment.

Q. How will I know if a funding request is approved?
A. A Confirmation of AHP Funds Disbursement will be emailed or faxed to the Member and
   Sponsor.

Q. How long does it take to receive funding once the FHLBank has received a completed
   AHP Habitat Disbursement Request and all supporting documentation?
A. Typically, the FHLBank will require up to 30 days for reviewing the Disbursement
   Request and providing the funds, but if additional information is required, it may take
   longer.

Q. How will the Member institution receive funding after a request for funds has been
   approved?
A. We will credit the Member’s Demand Deposit Account with the FHLBank for the amount
   approved.

Q. We have had significant turnover within the organization since our application for AHP
   funds were approved. Are there any resources to improve our familiarity with the
   program and the approval process?
A. See the AHP Habitat Disbursement webinar under Resources/Webinars on the
   FHLBank’s website at www.fhlbcin.com and review this manual. You may also contact a
   member of our staff for questions. Also be sure to notify the FHLBank of staffing
   changes so that we may update our records
                                                                                            Page 27



Common Mistakes
In order to assist our Members and Sponsors in receiving funds in a timely manner, we have
included a list of common mistakes that can potentially delay the processing of your AHP
Habitat Disbursement Request.
   1. The AHP Habitat Disbursement Request is incomplete or unsigned by one or both
      parties. All questions should be answered. If a question is not applicable, please check
      the “N/A” box in the space provided.
   2. The AHP Attachment D has not been provided or does not relate to the Detailed Cost
      Breakdown.
   3. The Detailed Cost Breakdown was not signed and dated by the Sponsor.
   4. All of the funding sources approved at application or used for the homebuyer were not
      documented with executed grant agreements, Notes/Mortgages (Deeds of Trust), or
      equity letters or the cost breakdown provided did not indicate use of any of these sources.
   5. Documentation provided as evidence of special needs, elderly, homeless, or first-time
      homebuyer status does not meet the FHLBank’s definitions.
   6. Income verification has not been provided for all sources of income, is not for the initial
      intake application year, does not adequately identify the household member or
      employer/issuer, or is not sufficient. This is the number one reason for delay.
   7. Verification of land cost and/or market value was not submitted and/or does not tie to the
      amount on the Detailed Cost Breakdown or the property referenced in the borrower’s
      deed.
   8. The homebuyer’s loan application is not signed and/or dated.
   9. Household size is unclear from the application, or other documentation contradicts the
      household size listed on the intake application.
   10. The Sponsor or Member is delinquent with regard to additional information submission
       or reporting or monitoring requirements of the FHLBank for the project being submitted
       or others.
   11. The Sponsor or Member is unfamiliar with the commitments made in the AHP
       application.
   12. The homebuyer’s deed does not contain the FHLBank’s retention language, contains old
       language, or does not reference attached language.
   13. Project does not appear that it will fulfill all required commitments, requires
       modification, or may not be fully funded prior to the commitment expiration date.
   14. The AHP Sponsor Commitment Verification Form was not submitted with the last
       disbursement for the project.
   15. The Developer’s Fee on the Attachment D exceeds the approved limits.
                                                                                    Page 28



STAFF LISTING

                                          Phone Number      Email Address

W. Jeff Reynolds                          (513) 852-7614    reynoldswj@fhlbcin.com
Senior Vice President

Damon v. Allen                            (513) 852-7518    allendv@fhlbcin.com
Vice President

Brenda A. Pierre                          (513) 852-7505    pierreba@fhlbcin.com
Housing Quality Assurance Officer

Mary L. Hernandez                      (513) 852-7604       hernandezml@fhlbcin.com
Housing Program Manager/Reporting & Monitoring

Jessica H. Wells                          (513) 852-7617    wellsjh@fhlbcin.com
Housing Development/Finance Specialist

Julie M. Doerger **                     (513) 852-7609      doergerjm@fhlbcin.com
Housing Program Manager/Disbursements & Modifications

Jill A. Cravens **                   (513) 852-7550         cravensja@fhlbcin.com
Housing Program Manager/Welcome Home

Laura K. Overton **                       (513) 852-7603    overtonlk@fhlbcin.com
Housing Program Analyst



                                       1-888-345-2246
                                    Fax: (513) 852-7647
                          Visit us on the web at www.fhlbcin.com


** Habitat Disbursement Reviewers

								
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